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Competitiveness Strategy for the Czech Republic

Competitiveness Strategy for the Czech Republic. Back to the Top 2012-2020. Status quo. What is holding us back?. Slowdown in productivity growth Economic growth based on external debt Inefficient institutions, excessive regulation and corruption

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Competitiveness Strategy for the Czech Republic

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  1. Competitiveness Strategy for the Czech Republic Back to the Top 2012-2020

  2. Status quo

  3. What is holding us back? • Slowdown in productivity growth • Economic growth based on external debt • Inefficient institutions, excessive regulation and corruption • Large internal debt and incomplete transport infrastructure Reforms are needed simply to maintain our current position 3

  4. What is holding us back? • Institutions • the inefficiency and corruption of the public sector is increasing, which places a burden on the private sector, particularly entrepreneurs • public services will become more expensive, while their quality will not improve • Infrastructure • the benefits arising from the CR‘s advantageous position in Europe are slowly fading away • regional imbalances are intensifying • Innovation • the role of the CR is being reduced to that of a passive supplier to other countries, slowing economic growth and sustainable development • falling standards in Czech education are starting to slow the economy and the competitiveness of the Czech workforce

  5. Objective of the competitiveness strategy • By 2020, the CR willbeoneofthe20 most competitiveeconomies in theworld • Vision: high and sustainable standard oflivingbased on a solid foundationofcompetitiveness

  6. How do we achieve this goal? • nine key pillars • over 50 proposals for specific projects • links to other policy documents • Cohesion policy • Export strategy • Energy Policy • National Reform Programme

  7. European Commission’s Recommendations • European Commission’s June 2011 evaluation of National Reform Programme 2011 and Convergence Programme of the Czech Republic. • Deficiencies identified by the Commission are addressed in the pillars: • Macroeconomic Stability • Labour Market • Education • Institutions • Infrastructure • Innovation • Measures outlined in the Strategy are in accordance with recommendations proposed by the Commission.

  8. CompetitivenessStrategyProjects 8

  9. Institutions Vision: efficient and non-corrupt public institutions providing quality services to citizens and entrepreneurs • Today: one of the CR‘s weakest points (GCI 72ndplace in 2010) • Tools: • Professionalization of public sector services • Management under the magnifying glass (transparency of management of state property, „online budgets“) • Facilitating access for citizens and entrepreneurs to public sector services through computerisation • Reinforcing the assessment of regulatory impacts and corruption risks – including their position vis-a-vis European legislation, and improving citizens‘ access to the law - e-Sbírka (e-collection of laws) • Electronic arbitration proceedings and other tools to speed up law enforcement

  10. OECD Survey & Competitiveness Strategy

  11. Implementation Plan • E-government – basic registers should start to operate in 2012 – Ministry of Interior • Single web portal with on-line budgets in 2012- Ministry of Finance • Single web portal for dispositions of public property – 2012 - Ministry of Finance • Single Collection Agency should start functioning at the beginning of 2014 (cooperation between ministries of Finance, Health and Labour and Social Affairs • New RIA metodology and introduction of CIA – 2012 Ministry of Interior

  12. Infrastructure Vision: The country‘s competitiveness rises alongside the quality of its infrastructure • Today– slowdown in construction and maintenance, lack of links to the European transport networks, weakening energy security, slow development of information systems • Tools: • Coordinated, cost-effective development of all modes of transport – i.e. road, rail, water and air, linking them to European networks • Increasing the competitivity of rail transport in relation to road traffic and to rail transport in neighbouring states • Development of logistic systems (VLCs, optimisation of distribution processes) • Quality management system for the maintenance and reconstruction of transport routes and high standards in transport • Creating a State Energy Plan (SEP) • Improving access to high-speed internet services

  13. Implementation Plan • Majority of measures proposed in the area of transport infrastructure will be implemented in medium or long time horizon. By 2025 the quality of road, rail, air and water transport should improve substantially. • New concept of State Energy Plan (SEP) will be elaborated by the end of 2011. • Better availability of broadband Internet access in less populated and accessible areas will be ensured by 2015.

  14. Macroeconomic Stability Vision: an economy with healthy and flexible foundations • Today: economic growth dependent on public spending and rising debt. The country‘s internal savings are declining alarmingly. • Tools: • Act on budgetary discipline • Numerical fiscal rules • Exchequer • Taxes – a single collection point • A shift from taxing labour to taxing consumption • Minimising unnecessary exemptions • Creating a tax floor • Early warning system

  15. OECD Survey & Competitiveness Strategy 15

  16. Implementation Plan • Majority measures in the project „Financial supervision – sustainable public finance“ will be implemented by the end of 2012. • Measures in the project „Competitive tax system“ should be realized 2011-2013.

  17. Healthcare Vision: financially sustainable healthcare at a European level • Today: the increasing financial strain on the system, caused by an aging population, medical advances and the increasing demands of patients and staff • Tools: • Rationalise purchases of medical equipment and pharmaceuticals (bulk purchases in the form of electronic auctions, access to generic drugs, centralised prescriptions) • Streamline financing (transition to pre-payments, coordination of care between providers, sharing health records) • Real competition between healthcare insurers • Restructuring inpatient care (fewer acute cases, more follow-up and long-term care cases) • More precise definitions of standard/luxury, conditions for care provision • Preventive measures, incentives for prevention

  18. OECD Survey & Competitiveness Strategy 18

  19. Implementation Plan • Luxury package • Definition – 2013 • Implementation – 2013 • Diversity of insurance plans • Analysis – 2012 • Implementation - 2013 • Long-term case • Changing beds of acute care to long-term care – start 2012 • Establishing concept of health+social long-term - 2013

  20. Education Vision: Education as an engine of future economic and social development. Schools as preparation for life in an environment of dynamic change • Today: Declining literacy of Czech pupils, obsolete and rigid system. • Tools: • Improving the quality and availability of kindergartens • Aligning apprenticeships and professional undergraduate education more to the needs of employers, their greater involvement in professional training • Improving the quality of schools (introducing standardisation, evaluation, changing the role of the CSI) • Changing the system of accreditation, the system of evaluating research and development at universities • Increasing the proportion of undergraduate students, particularly career-oriented degrees+ reducing the proportion of students taking masters degrees • Tuition fees with a system of universal loans with contingency repayment • Public information system on higher education • Enhancing literacy, mathematical and financial literacy and soft skills

  21. OECD Survey & Competitiveness Strategy 21

  22. Implementation Plan • Project Increasing quality and availability of preschool education – 2013 • Elementary and secondary education reforms– 2015 • Tertiary education reforms – 2020 • Project Changes in curriculum - 2016

  23. Labour Market Vision: a flexible labour market to facilitate the efficient use of human resources. • Today: rigid labour market with a range of barriers and little mobility • Tools: • A significant increase in the employment of people over 55 years of age • Unifying the activities and simplifying the administrative agenda of public authorities (unifying benefits) • Increasing the employment of women with young children (pre-school education) • Significantly facilitating access to highly educated foreigners (basic change to the policy on aliens) • Increasing the offer of part-time jobs • Support for rental housing • Motivating the less productive workforce to take up work, reducing the grey economy

  24. OECD Survey & Competitiveness Strategy 24

  25. Implementation Plan • Majority of the measures will be implemented by the end of 2012 • Project „Increasing the availability of rental housing“ has two main phases – thorough analysis of the market and finding and implementing appropriate measures – by the end of 2013 • All measures concerning social affairs are subject to evidence based policies - continuously

  26. Financial Markets Vision: a financial sector that supports the competitiveness of the Czech economy • Today: a conservative financial sector with local higher prices for services • Tools: • Reinforcing competition in the financial markets – removing unnecessary barriers: • Legislative barriers to IPOs • In the implementation of legislation –strengthening creditor rights • Creating „seed funds“ to create new, progressive companies (key role for the CMGDB) • The predictability of key policies and sustainability of the reforms adopted

  27. Implementation Plan • Verification of the functioning of the existingregulatory environment e.g. legal procedures weakening the rights of creditors • Removal of the obstacles preventing companies from accessing financial markets - IPOs • The Czech-Moravian Guarantee and Development Bank(CMGDB) as institution for implementing innovative financial engineering instruments • The Seed Fund project with a positive impact on the structure of the economy

  28. Effective market for goods and services Vision: a favourable environment and service for business and commerce • Today: • Production base for subcontracting to the EU market, without direct market knowledge or direct product distribution • High degree of specialisation of exports and imports • Weaker domestic sector, low level of innovation • Tools: • Uniform data on the effect of legal regulations impacting businesses • Eco-audit • Minimum capital requirements, greater accountability of statutory bodies • Development of the BusinessInfo.cz portal • Amendment to the Act on investment incentives • Services for innovative business • Single Windows – single contact point for customs • The option of calculating the tax base from statements made for the IFRS

  29. OECD Survey & Competitiveness Strategy 29

  30. Implementation Plan • Improvement of services for entrepreneurs (eg. Development of BusinessInfo.cz portal) should be realized by 2013. • Services for innovative business - services for the commercialisation and internationalisation, services to support technology transfer and the greater use of patent protection – realization 2011-2020 • Act on business corporations (if approved by the Parliament) should come into effect at the beginning of 2014 • Project on measuring of administrative burden will be finished in 2013 and then the recommendations will be implemented • Eco-audit is running project which in 2 years intervals assesses the excessive burden of environmental measures on businesses • Common commencement dates will be set in 2012 for key government measures with impact on businesses

  31. Innovation Vision: Innovation as a source of future prosperity for the Czech Republic • Status quo: • Existing sources of growth (e.g. FDI) are gradually being depleted • Innovation by companies outside the Czech Republic • Domestic innovation is being hindered by the absence of non-technical skills, a low level of cooperation of academia with companies (innovations are formed in companies, not in institutes or academic organisations) • The system of evaluation and financing of R&D does not support excellence • Tools: • Identification of the key technological areas of the Czech Republic on the basis of foresight – prioritising support for innovation and R&D • Institutional reform of the innovation ecosystem – clear definition of roles + strong central authority + dialog + interaction • Changes in the evaluation of R&D institutions and programmes impacting funding – support for excellence • Optimising and developing support services of the technology transfer infrastructure

  32. Implementation Plan • Institutional reform of the innovation ecosystem (strongcenralauthority + definitionofroles) – analysis, discussion and legislation changes, realization 2011-2013 • New systemof evaluation of R&D institutions – impact on funding (support ofexcellence) – realization 2011-2012 • Identificationofkeyenablingtechnologiesforthe CZ in order to prioritizetheR&D&I support (based on foresight) – realization 2011-2013

  33. Example of project card: services for innovative business Eachcard has a clearlydefined coordinator Anoverviewofthe specificmeasures

  34. Example of project card: services for innovative business Examplesofgood practicefromabroad Concrete objectiives and standards of its implementation

  35. Example of project card: services for innovative business Timetablefor individualmeasures withdesigneddeadlines

  36. Export Strategy • Vision: the development and diversification of exports as an engine of economic growth in the Czech Republic • Today: the lack of a high quality and dynamic pro-export strategy • Tools: • The creation of a Pro-export strategy for the Czech Republic for the period from2012-20 and its close links to the Competitiveness Strategy of the Czech Republic. • Lobbing for better conditions for international trade • CR representation abroad, with respect to its economic interests • Coordination of agencies and information sharing in pro-export activities (ICC, sectoral unions, CzechTrade, MIT and MFA, ČEB, CMDGB and commercial banks, EGAP) • Modern state services (market research, business and market intelligence, following trends) • Facilitating visas for trade purposes

  37. Cohesion Policy • Vision: a competitiveness strategy and cohesion strategy going in the same direction. • Today: • 2007-13 the most money per capita paid out by the EU, but the Czech Republic has little success in its use • Focus on hard investment projects and grants, but opportunities for soft projects and financial tools underused • Too many operational programmes and priorities, redistribution mechanism • Tools: • Concentrating the cohesion policy on the quality of the business environment, on completing infrastructure projects, the labour market and the education system • Major reduction in the number of operational programmes and priority areas • Major simplication of the implementation structure • Simulatneous release of funds from multiple OP • Strengthening the role of intermediary bodies, increasing the rate of participation of beneficiaries • Increasing importance of non-subside suport tools, emphasis on return on investment • The use of direct community programmes

  38. Timing of implementation - non-legislative actions Innovation Business Financial markets Labour market Education Healthcare Macroeconomics Infrastructure Institutions 63 key non-legislative actions

  39. Timing of implementation - legislative actions Innovation Business Financial markets Labour market Education Healthcare Macroeconomics Infrastructure Institutions 71 key legislative actions

  40. What is next? • The recently restored Government Council for Competitiveness and an Information Society will oversee its implementation • Ministry of Industry and Trade will report progress of the implementation to the Government every six month

  41. International Competitiveness Department Ministry of Industry and Trade of the Czech Republic Na Františku 32, Praha 1

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